The COVID-19 pandemic has already caused significant stress on tenants who face ongoing lease obligations and those financial stresses are likely to continue in the short-term.
Residential Tenancies
The Irish Government has recognised the potential impact of the economic downturn caused by COVID-19 on residential tenants by initiating the Emergency Measures in the Public Interest (Covid-19) Bill 2020. This legislation which was passed by the Dáil Éireann on 26 March 2020 applies to all residential tenancies regulated by the residential tenancies act (including licensees living in purpose built student accommodation) contains the following key amendments to the residential tenancies legislation:
- a freeze on increases in rent during the emergency period;
- a freeze on evictions during the emergency period (unless approved by an adjudicator of the residential tenancies board);
- a prohibition on the serving of eviction/termination notices during the emergency period for any reason; and
- the suspension of the requirement that residential tenancy tribunal hearings be held in public.
The emergency period is defined as a 3 month period, however that period can be extended if it is in the public interest. The bill also provides that tenants will not gain any rights by reason of remaining in occupation of the property during the emergency period when such rights would otherwise not have arisen (i.e. if a lease would otherwise have expired before a tenant gained a Part 4 tenancy after remaining in occupation for 6 months, the tenant will not gain such entitlement). It is expected that this bill will become law before the Seanad Éireann is dissolved on 29 March 2020 and it may be that changes are made to the above draft legislation, however we expect that the substance of the additional protections will remain materially unchanged.
A late amendment in the Dáil Éireann to the draft legislation provides that the freeze on evictions also applies to all other tenancies in the State during the operation of the Emergency Measures in the Public Interest (Covid-19) Act 2020, including those not regulated by the residential tenancies act and the tenants of local authorities. This freeze on evictions also prohibits travellers being evicted from a location that they are were currently resident at during this crisis unless necessary to ameliorate hardship and provide protection and following consultation with those travellers. This late amendment does not refer explicitly to the freeze on evictions only applying for the “emergency period” as with the other provisions, but instead refers to a ban “during the operation of the” Act and in the case of the freeze on evictions of travellers “during the crisis”, so it is arguable that as drafted the freeze on evictions for all tenancies and travellers evictions could apply longer than the 3 month emergency period intended. This may be clarified when the bill reaches the Seanad Éireann.
The above proposed protections do not apply to persons renting a room in the home of a landlord as those licence arrangements do not constitute tenancies subject to landlord and tenant protections.
Commercial Tenancies
The Irish Government has not yet introduced any explicit equivalent protections for commercial tenants. It could be argued that the amendment prohibiting evictions of “all tenancies” introduced by the Emergency Measures in the Public Interest (Covid-19) Act 2020 would extend to commercial tenancies as well, however it is not entirely clear that this was the intention of that Act and consequently whether such an argument would be accepted. A proposed amendment that would have clearly extended the ban on evictions to commercial tenancies was rejected when that bill was debated.
In contrast, the UK government has introduced a bill that explicitly proposes to freeze evictions of commercial tenants due to missed rent payments for a period up to 30 June 2020 (as may be extended), so it may be that the Irish government decides to adopt similar clear protections in the future. The UK tenants in that situation will continue to owe the missed rent after the expiry of the suspended eviction period.
While COVID-19 is an extraordinary event, most Irish commercial leases will not contain any “force majeure” clause permitting the suspension of lease obligations (such as rental/service charge payments) or the extension of rent free periods otherwise agreed. If tenants are struggling to meet their rental/service charge obligations or are prevented from trading in breach of a keep open covenant, we advise them to engage proactively with their landlord to negotiate rent concessions/amendments (as appropriate). The amendments to the lease could potentially take the form of rent suspensions/deferrals and the extension of the lease term. It is likely that any such agreement will have to preserve the service charge obligation, as while service costs may have reduced if common areas are closed, there will likely still be unavoidable security and insurance costs which are crucial to preserve the property. It may be that a landlord seeks something in return for any such concession, such as the removal of a break option otherwise enjoyed by a tenant.
It is important that whatever amendments are agreed are documented formally, whether by way of side-letter or amendment agreements for certainty.
We will continue to provide updates on new legislative developments in this area as and when published. This note is accurate as of 26 March 2020.